- The Washington Times - Tuesday, March 17, 2009

NEW YORK (AP) - Wall Street fluctuated in a narrow range Tuesday as a mix of economic and corporate news made for an indecisive session.

Better-than-expected reports on housing and inflation were offset by news of a dividend cut at Alcoa Inc. and layoffs at Nokia Corp.

Investors are also unlikely to make many moves ahead of the Federal Reserve’s two-day meeting that ends Wednesday afternoon, said Craig Peckham, a market strategist at Jefferies & Co. The Fed is widely expected to leave interest rates at their current historically low levels, but the market will be keen to see how the central bank assesses the economy in its statemen that accompanies its interest rate decision.

The Commerce Department said new home construction rose unexpectedly to an annual rate of 583,000 in February from a revised 477,000 in January. Economists expected construction to drop to a pace of around 450,000 units, according to Thomson Reuters.

Building permit applications, a key measure of future activity, also rose unexpectedly.

Tim Courtney, the chief investment officer at Burns Advisory Group, said the housing report was encouraging and could be part of an initial recovery in the housing market.

“We could be in the very early stages of some kind of normalization” in housing, he said. A housing recovery is widely seen as a key to helping end the recession.

Peckham said the improved housing numbers were mostly due to condominium construction, which is not as strong an indicator of recovery as growth in single-family homes. That tempered the market’s initial reaction to the data, he said.

Separately, the Labor Department said wholesale prices rose 0.1 percent in February after rising 0.8 percent in January. Economists predicted the producer price index would rise 0.4 percent during the month. The government said core inflation, which excludes energy and food, edged up 0.2 percent in February after rising 0.4 percent in January.

In late morning trading, the Dow Jones industrial average rose 26.12, or 0.36 percent, to 7,243.09. The Standard & Poor’s 500 index rose 6.07, or 0.81 percent, to 759.96, while the Nasdaq composite index rose 17.62, or 1.25 percent, to 1,421.64.

The market snapped a streak of four straight increases on Monday as a rally waned in the afternoon.

The Russell 2000 index of smaller companies rose 3.83, or 0.99 percent, to 390.19

Advancing issues outpaced decliners by about eight to five on the New York Stock Exchange, where volume came to 361 million shares.

While investors wait for the Fed meeting to end, Peckham said individual company announcements can have a bigger impact on the market.

Alcoa became the latest Dow Jones industrial to lower its dividend to conserve cash. The aluminum maker said after the market closed Monday it was cutting its quarterly dividend 82 percent to 3 cents. It also said it plans to sell stock and debt to help reduce annual costs by more than $2.4 billion.

“We’re seeing a management team remind us just how tough the fundamental economy is performing,” Peckham said. He added that it was encouraging that a major company announcing a dividend cut did not send “shockwaves” through the market.

“Investors are able to brace themselves for this kind of news” now, Peckham said.

Shares of Alcoa fell 55 cents, or 9 percent, to $5.57.

Nokia, the world’s top mobile phone maker, said it will lay off 1,700 people worldwide to cut costs. Nokia fell 20 cents to $11.15. The mobile phone market has been suffering as consumers spend less during the recession.

Meanwhile, bond prices mostly rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.94 percent from 2.96 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, was flat at 0.23 percent compared with late Monday.

The dollar mostly rose against other major currencies, while gold prices fell.

Oil prices rose $1.12 to $48.47 a barrel on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock jumped 3.2 percent. In afternoon trading, Britain’s FTSE 100 fell 1.2 percent, Germany’s DAX index declined 1.7 percent, and France’s CAC-40 fell 1.3 percent.


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